2012 Annual Financial ReportCITY OF SANGER, TEXAS
FINANCIAL REPORT
SEPTEMBER 30, 2012
C O N T E N T S
Page(s)
INDEPENDENT AUDITOR’S REPORT ........................................................................................ 1
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) .............................................. 3
BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements
Statement of Net Assets ................................................................................................. 12
Statement of Activities ..................................................................................................... 13
Fund Financial Statements
Governmental Funds
Balance Sheet ........................................................................................................... 14
Reconciliation of the Governmental Funds Balance Sheet to the
Statement of Net Assets ...................................................................................... 16
Statement of Revenues, Expenditures, and Changes in Fund Balances .................. 17
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities ......................................................................................... 19
Proprietary Funds
Statement of Net Assets ............................................................................................ 20
Statement of Revenues, Expenses, and Changes in Fund Net Assets .................... 21
Statement of Cash Flows .......................................................................................... 22
Notes to Basic Financial Statements .................................................................................... 24
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
Schedule of Funding Progress for Participation in
Texas Municipal Retirement System ............................................................................. 47
Budgetary Comparison Schedule – General Fund ............................................................... 48
SUPPLEMENTARY INFORMATION (UNAUDITED)
Combining Schedule of Revenues and Expenses – Proprietary Fund by Department ......... 49
Analysis of Property Taxes Receivable ................................................................................. 51
1
AN INDEPENDENT
MEMBER OF BAKER TILLY
INTERNATIONAL
WEAVER AND TIDWELL LLP
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
WWW.WEAVERLLP.COM
FORT WORTH
2821 W SEVENTH STREET, SUITE 700, FORT WORTH, TX 76107
P: (817) 332 7905 F: (817) 429 5936
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor Thomas Muir
and Members of the City Council
City of Sanger, Texas
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the
City of Sanger, Texas (the City) as of and for the year ended September 30, 2012, which
collectively comprise the City’s basic financial statements as listed in the table of contents.
These financial statements are the responsibility of the City’s management. Our responsibility is
to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the City as of September 30, 2012,
and the respective changes in financial position and, where applicable, cash flows thereof for
the year then ended in conformity with accounting principles generally accepted in the United
States of America.
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis, the schedule of funding progress and budgetary
comparison schedule on pages 3 through 11 and 47 through 48 be presented to supplement the
basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board, who considers it to
be an essential part of financial reporting for placing the financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the
required supplementary information in accordance with auditing standards generally accepted in
the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the financial statements, and other knowledge we obtained during
our audit of the financial statements. We do not express an opinion or provide any assurance on
the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
2
To the Honorable Mayor Thomas Muir
and the Members of the City Council
City of Sanger, Texas
Page 2
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s basic financial statements as a whole. The Combining Schedule
of Revenues and Expenses – Proprietary Fund by Department and Analysis of Property Taxes
Receivable on pages 49 through 51 are presented for purposes of additional analysis and are
not a required part of the financial statements. This information has not been subjected to the
auditing procedures applied in the audit of the basic financial statements and, accordingly, we
do not express an opinion or provide any assurance on them.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, TX
February 21, 2013
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2012
3
The management of the City of Sanger offers readers of the financial statements this narrative
overview and analysis of the financial activities of the City of Sanger for the fiscal year ended
September 30, 2012. We encourage readers to consider the information presented here in
conjunction with the City’s financial statements and accompanying footnotes of this report.
FINANCIAL HIGHLIGHTS
The assets of the City of Sanger exceeded its liabilities at the close of the most recent
fiscal year by $23,507,689 (net assets). Of this amount, $5,931,366 (unrestricted net
assets) may be used to meet the government’s ongoing obligations to citizens and
creditors in accordance with the City’s fund designation and fiscal policies.
The City’s total capital assets increased by $451,268.
As of the close of the fiscal year, the City’s governmental funds reported combined
ending fund balances of $2,693,754.
The fund balance of the General Fund decreased by $26,826 or 3% to $773,397 at
September 30, 2012 primarily due to a transfer to the Capital Projects Fund of $200,000.
OVERVIEW OF THE FINANCIAL STATEMENTS
The Management’s Discussion and Analysis is intended to serve as an introduction to the City
of Sanger’s basic financial statements. This annual report consists of three components:
(1) government-wide financial statements, (2) fund financial statements, and (3) notes to the
financial statements. This report contains other supplementary information in addition to the
basic financial statements themselves.
Government-wide Statements. The government-wide financial statements are designed to
provide readers with a broad overview of the City’s finances in a manner similar to private-
sector business. The statements report information about the City as a whole using accounting
methods similar to those used by private-sector companies.
The statement of net assets includes all of the government’s assets and liabilities, with the
difference between the two being reported as net assets. Over time, increases or decreases in
net assets are an indicator as to whether the financial position of the City is improving or
deteriorating. To assess the overall health of the City, additional non-financial factors (such as
the City’s tax base) will need to be considered.
The statement of activities presents information on how the City’s net assets changed during
the fiscal year. All of the current year’s revenues and expenses are accounted for in the
statement of activities regardless of when cash is received or paid. Thus, revenues and
expenses are reported in this statement for some items that will only result in cash flows in
future fiscal periods (e.g., uncollected taxes and earned, but not used vacation leave).
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2012
(CONTINUED)
Major Features of the City of Sanger's Government-wide and Fund Financial Statements
4
Both the statement of net assets and the statement of activities are prepared using the accrual
basis of accounting as opposed to the modified accrual basis of accounting.
In its Statement of Net Assets and Statement of Activities, the City of Sanger is divided between
two kinds of activities:
Governmental activities. Most of the City’s basic services are included here, such as
general government, public safety, streets, sanitation, and culture and recreation.
Property taxes, sales taxes, franchise fees, and charges for services finance most of
these activities.
Business-type activities. A fee is charged to customers by the City to cover the cost of
services it provides. The City’s utility systems (electric, water, and wastewater) activities
are reported here.
Fund Financial Statements. The fund financial statements provide more detailed information
about the City’s most significant funds and not the City as a whole. Funds are accounting
devices that the City uses to keep track of specific sources of funding and spending for
particular purposes.
Certain funds are restricted by State law and by bond covenants.
The City Council establishes guidelines to control and manage money for particular
purposes or to show that it is properly using certain revenue resources.
The City has two categories of funds: governmental funds and proprietary funds.
Governmental funds. The City’s basic services are included in governmental funds,
which focus on cash and other financial assets that can readily be converted to cash
flow, as well as the balances left at year-end that are available for spending.
Consequently, the governmental fund statements provide a detailed short-term view that
helps determine whether there are more or fewer financial resources that can be spent
in the near future to finance the City’s programs. Because this information does not
encompass the additional long-term focus of the government-wide statements, additional
information is provided on the subsequent pages, explaining the relationship (or
differences) between them. The relationship or differences between governmental
activities (reported in the Statement of Net Assets and the Statement of Activities) and
governmental funds is detailed in a reconciliation following each of the fund financial
statements.
Proprietary funds (business-type funds). Services for which the City charges customers
a fee are generally reported in proprietary funds. Proprietary funds, like government-
wide statements, provide both short and long-term financial information. Proprietary
funds are reported in the same manner that all activities are reported in the Statement of
Net Assets and the Statement of Activities.
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2012
(CONTINUED)
Major Features of the City of Sanger's Government-wide and Fund Financial Statements
5
Fund Statements
Government-
wide
Governmental
Funds
Proprietary
Funds
Scope Entire
government
(except fiduciary
funds) and the
its component
units
The activities of
the City that are
not proprietary or
fiduciary
Activities the City
operates similar
to private
business: electric,
water, and
wastewater
utilities
Required
Financial
Statements
Statement of net
assets
Balance Sheet Statement of net
assets
Statement of
activities
Statement of
revenues,
expenditures and
changes in fund
balances
Statement of
revenues,
expenses and
changes in fund
net assets
Statement of cash
flows
Accounting
basis and
measurement
focus
Accrual
accounting and
economic
resources focus
Modified accrual
accounting and
current financial
resources focus
Accrual
accounting and
economic
resources focus
Type of
asset/liability
information
All assets and
liabilities, both
financial and
capital, short-
term and long-
term
Only assets
expected to be
used up and
liabilities that
come due during
the year or soon
thereafter; no
capital assets
included
All assets and
liabilities, both
financial and
capital, and short-
term and long-
term
Type of
inflow/outflow
information
All revenues and
expenses during
year, regardless
of when cash is
received or paid
Revenues for
which cash is
received during or
soon after the end
of the year;
expenditures
when goods or
services have
been received
and payment is
due during the
year or soon
thereafter
All revenues and
expenses during
year, regardless
of when cash is
received or paid
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2012
(CONTINUED)
6
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As of September 30, 2012, the City’s combined net assets were $23,507,689, of which
$10,313,749 can be attributed to governmental activities and $13,193,940 attributed to
business-type activities. This analysis focuses on the net assets (Table 1) and changes in net
assets (Table 2) of the City’s governmental and business-type activities.
Net Assets
Net assets at September 30, 2012, were $23,507,689, representing an increase of $2,676,673
in total net assets of governmental and business-type activities. The largest portion of the City’s
net assets reflects its investment in capital assets (e.g., land, building, machinery, equipment,
and infrastructure – streets, drainage, water, wastewater, and electric) less any related debt
used to acquire those assets that is still outstanding. The City uses these capital assets to
provide services to citizens; consequently, these assets are not available for future spending.
Although the City’s investment in its capital assets is reported net of related debt, it should be
noted that the resources needed to repay this debt must be provided from other sources, since
the capital assets themselves cannot be used to liquidate these liabilities.
Table 1 – Net Assets
2012 2011 2012 2011 2012 2011
Assets
Cash and cash equivalents 415,126$ 477,062$ 2,293,053$ 1,053,839$ 2,708,179$ 1,530,901$
Certificates of deposit 408,004 405,436 335,825 419,966 743,829 825,402
Accounts receivable, net 411,622 344,678 1,537,373 1,178,950 1,948,995 1,523,628
Inventories - 433,508 300,607 433,508 300,607
Due from other funds 263,811 - - - 263,811 -
Restricted cash
and cash equivalents 1,735,949 2,424,955 2,623,570 2,312,309 4,359,519 4,737,264
Bond issuance costs, net 281,317 295,168 73,087 102,643 354,404 397,811
Capital assets, net of
accumulated depreciation 14,973,623 14,146,175 12,789,033 13,165,213 27,762,656 27,311,388
Total assets 18,489,452$ 18,093,474$ 20,085,449$ 18,533,527$ 38,574,901$ 36,627,001$
Liabilities
Accounts payable 272,746$ 684,916$ 581,313$ 498,353$ 854,059$ 1,183,269$
Customer deposits - - 315,761 297,609 315,761 297,609
Other liabilities 163,986 99,009 147,008 166,171 310,994 265,180
Due to other funds - - 263,811 - 263,811 -
Current portion long-term debt 676,619 578,015 657,993 534,466 1,334,612 1,112,481
Compensated absences 110,404 77,947 67,973 54,220 178,377 132,167
Long-term debt 6,951,948 7,311,051 4,857,650 5,494,228 11,809,598 12,805,279
Total liabilities 8,175,703$ 8,750,938$ 6,891,509$ 7,045,047$ 15,067,212$ 15,795,985$
Net assets
Invested in capital assets 7,371,097$ 6,274,498$ 7,287,190$ 7,150,229$ 14,658,287$ 13,424,727$
Restricted for specific purpose 610,227 524,980 2,307,809 2,014,700 2,918,036 2,539,680
Unrestricted 2,332,425 2,543,058 3,598,941 2,323,551 5,931,366 4,866,609
Net assets 10,313,749$ 9,342,536$ 13,193,940$ 11,488,480$ 23,507,689$ 20,831,016$
Governmental
Activities
Business-Type
Activities Total
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2012
(CONTINUED)
7
Changes in Net Assets
Governmental activities increased the City’s net assets by $971,213 and business-type activities
increased the City’s net assets by $1,705,460. The key elements of these changes are
contained in Table 2.
Table 2 – Changes in Net Assets
2012 2011 2012 2011 2012 2011
Revenues
Program Revenues:
Charges for services 1,511,279$ 1,424,884$ 10,740,154$ 10,189,544$ 12,251,433$ 11,614,428$
Grants and donations 500,000 195,102 - - 500,000 195,102
General Revenues:
Taxes 4,108,822 4,046,632 - - 4,108,822 4,046,632
Licenses and permits 130,869 44,827 - - 130,869 44,827
Investment earnings 16,826 34,292 32,902 30,882 49,728 65,174
Transfers - 307,241 - (307,241) - -
Miscellaneous 211,956 150,708 - - 211,956 150,708
Gain (loss) on sale of assets - 7,436 - - - 7,436
Total revenues 6,479,752 6,211,122 10,773,056 9,913,185 17,252,808 16,124,307
Expenses
General government 750,649 705,012 - - 750,649 705,012
Police and animal control 1,503,327 1,436,505 - - 1,503,327 1,436,505
Streets and sanitation 1,445,542 1,349,968 - - 1,445,542 1,349,968
Fire and EMS 766,011 692,184 - - 766,011 692,184
Court 209,333 228,030 - - 209,333 228,030
Culture and recreation 493,541 425,674 - - 493,541 425,674
Interest on long-term debt 340,136 377,693 217,588 317,323 557,724 695,016
Proprietary expenses - - 8,850,008 8,902,681 8,850,008 8,902,681
Total expenses 5,508,539 5,215,066 9,067,596 9,220,004 14,576,135 14,435,070
Change in net assets 971,213 996,056 1,705,460 693,181 2,676,673 1,689,237
Beginning net assets 9,342,536 8,346,480 11,488,480 10,795,299 20,831,016 19,141,779
Ending net assets 10,313,749$ 9,342,536$ 13,193,940$ 11,488,480$ 23,507,689$ 20,831,016$
Governmental Business-Type
Activities Activities Total
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2012
(CONTINUED)
8
The City’s total revenues for the year ended September 30, 2012, were $17,252,808 with a
significant portion, 71%, of the City’s total revenue coming from charges for services, 14% from
property taxes, 7% from sales taxes, while 8% is obtained from the remaining revenue sources
(see Figure 1). Because Sanger owns an electric utility, revenues from charges for services are
a large percentage of overall revenues. Without the ownership of its electricity utility, the City’s
property tax rate would be approximately ten cents higher per $100 valuation than its current
rate in order to generate the same amount of operating revenue.
Figure 1
Governmental activities revenues total $6,479,752 for the year ended September 30, 2012, of
which $4,108,822 (63%) is attributed to taxes. Significant general governmental expenses
include public safety (including Fire and EMS and police and animal control), which incurred
expenses of $2,269,338, and streets and sanitation, which incurred expenses of $1,445,542.
Business-type activities increased the City’s net assets by $1,705,460 and governmental
activities increased the City’s net assets by $971,213, accounting for positive growth in the
government-wide net assets in fiscal year ended September 30, 2012. Business-type operating
revenues increased by $859,871 to $10,773,056 for the year ended September 30, 2012, as a
result of an increase in tap fees for new construction. Business-type expenses decreased in
fiscal year ending September 30, 2012 mainly due to decreases in interest expense and
transfers, resulting in total business-type activity expenses of $9,067,596.
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2012
(CONTINUED)
9
FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
The City uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
Governmental Funds
The focus of the City’s governmental funds is to provide information on near-term inflows,
outflows, and balances of resources available to spend. This information is useful in assessing
the financial requirements of the City.
As of September 30, 2012, the City’s governmental funds reported a combined ending fund
balance of $2,693,754, a reduction of $52,546 from the previous fiscal year’s balance of
$2,746,300. The decline in fund balance is primarily due to infrastructure improvements. Of this
fund balance, $773,397 constitutes unassigned fund balance, which is available for spending at
the government’s discretion. The remainder of the fund balance is restricted to indicate that it is
not available for new spending because it has already been committed to pay debt service
($350,895), complete capital projects ($224,097), or enhance economic development
($1,345,365).
General Fund. The General Fund is the chief operating fund of the City. At September 30,
2012, the unassigned fund balance of the General Fund was $773,397 a decrease of $26,826
from the prior year. The decrease is primarily due to a $200,000 transfer from the Streets
Department to the Capital Projects Fund for infrastructure improvements. The City has
continued a very conservative approach to purchasing and employment during 2012 as a result
of the uncertain economic conditions.
Capital Projects Fund. The entire balance of the capital projects fund is restricted for capital
construction and acquisition. At September 30, 2012, the capital projects fund had a fund
balance of $224,097, a decrease of $525,881 from 2011.
At the end of 2012, the City had invested $27,762,656 in a broad range of capital assets,
including land, equipment, buildings, vehicles, streets, drainage, water, wastewater, and
electrical systems. (see Table 3).
Table 3 – Capital Assets
2012 2011 2012 2011 2012 2011
Land 862,307$ 862,307$ 323,164$ 323,164$ 1,185,471$ 1,185,471$
Construction in progress 272,385 3,239,639 291,414 - 563,799 3,239,639
Infrastructure 10,550,634 9,800,941 22,112,636 22,072,504 32,663,270 31,873,445
Buildings and equipment 9,614,364 5,667,489 2,459,441 2,282,128 12,073,805 7,949,617
Total historical cost 21,299,690 19,570,376 25,186,655 24,677,796 46,486,345 44,248,172
Total accumulated depreciation (6,326,067) (5,424,201) (12,397,622) (11,512,583) (18,723,689) (16,936,784)
Net capital assets 14,973,623$ 14,146,175$ 12,789,033$ 13,165,213$ 27,762,656$ 27,311,388$
Governmental Business-Type
Activities Activities Total
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2012
(CONTINUED)
10
Debt Service Fund. The debt service fund has a total fund balance of $350,895 at
September 30, 2012, an increase of $114,360 over 2011.
As of September 30, 2012, the City had $13,144,210 in long-term debt (see Table 4).
Table 4 – Long-term Debt
2012 2011 2012 2011 2012 2011
Notes payable 553,391$ 596,104$ -$ -$ 553,391$ 596,104$
Capital leases 340,119 70,162 370,401 376,494 710,520 446,656
Bonds payable 6,735,057 7,222,800 5,145,242 5,652,200 11,880,299 12,875,000
Total long-term debt 7,628,567$ 7,889,066$ 5,515,643$ 6,028,694$ 13,144,210$ 13,917,760$
Governmental Business-Type
Activities Activities Total
Proprietary Fund. The City’s proprietary fund provides the same type of information found in
the government-wide financial statements, but in more detail. Table 5 represents the cost of
each of the City’s business-type activities as well as each function’s net cost (total cost less fees
generated by the activities and intergovernmental aid). The cost of business-type activities for
fiscal year ended September 30, 2012 was $8,850,008. The amount for charges for services
that the City’s tax payers paid for these activities was $10,740,154. Excess funds are used by
the City to help support the general fund, keeping the property tax rate from increasing. Excess
funds are also used to fund capital improvements.
Table 5 – Proprietary Fund Activities
% Change % Change
2012 2011 2012 2011
Water 1,064,019$ 1,166,704$ -8.80% 438,488$ 113,337$ 286.89%
Sewer 824,434 785,829 4.91% 519,495 306,110 69.71%
Electric 6,307,713 6,249,768 0.93% 1,527,218 1,498,344 1.93%
Other 653,842 700,380 -6.64% (595,055) (630,928) -5.69%
Total 8,850,008$ 8,902,681$ -0.59% 1,890,146$ 1,286,863$ 46.88%
Total Operating Expenses Total Operating Income (Loss)
ECONOMIC FACTORS AND FISCAL YEAR BUDGET AND RATES
The fiscal year 2012-2013 budget incorporates no increase in the property tax rate. It remains at
$.633049 per $100 valuation. Certified appraised values used for the fiscal year 2013 budget
are $37 million higher than the amounts budgeted in the 2011-2012 fiscal year, thus increasing
the budgeted property tax revenue. The General Fund budgeted increase in fund balance for
fiscal year 2012-2013 is $9,805.
The 2012-2013 budget includes no change in either the water or wastewater rates. The
Enterprise Fund budgeted increase in fund balance is $161,318.
If revenues projected in the 2013 budget are realized, the City will be able to continue
operations, absorb inflationary costs, and increase its total fund balance by $461,516 for the
City as a whole.
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2012
(CONTINUED)
11
REQUESTS FOR INFORMATION
This financial report is designed to provide our citizens, taxpayers, customers, and investors
and creditors with a general overview of the City’s finances and to demonstrate the City’s
accountability for the funds it receives. If you have questions about this report or would like
additional information, please contact the City Manager at the City of Sanger City Hall at 502
Elm Street, Sanger, Texas 76266.
CITY OF SANGER, TEXAS
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2012
The Notes to Basic Financial Statements are
an integral part of this statement.
12
Governmental Business-type
Activities Activities Total
Cash and cash equivalents 415,126$ 2,293,053$ 2,708,179$
Certificates of deposit 408,004 335,825 743,829
Accounts receivable, net
Property taxes net of allowance of $60,667 80,907 - 80,907
Sales taxes 183,600 - 183,600
Emergency medical services, net of
allowance of $1,582,222 107,490 - 107,490
Utility accounts, net of
allowance of $111,174 - 1,504,299 1,504,299
Other 39,625 33,074 72,699
Inventories - 433,508 433,508
Internal balances 263,811 (263,811) -
Restricted cash 1,259,697 1,040,028 2,299,725
Restricted certificates of deposit 476,252 1,583,542 2,059,794
Bond issue costs, net 281,317 73,087 354,404
Capital assets
Capital assets not being depreciated 1,134,692 614,578 1,749,270
Capital assets being depreciated, net 13,838,931 12,174,455 26,013,386
TOTAL ASSETS 18,489,452$ 19,821,638$ 38,311,090$
Accounts payable and accrued liabilities 272,746$ 581,313$ 854,059$
Customer deposits - 315,761 315,761
Accrued interest payable 46,257 53,033 99,290
Deferred rent 40,008 - 40,008
Compensated absences, due within one year 45,164 34,108 79,272
Bonds payable, due within one year 537,288 479,993 1,017,281
Notes payable, due within one year 36,576 - 36,576
Capital leases, due within one year 102,755 178,000 280,755
Other 77,721 93,975 171,696
Noncurrent liabilities
Compensated absences, due in more
than one year 65,240 33,865 99,105
Bonds payable, due in more than one year 6,197,769 4,665,249 10,863,018
Notes payable, due in more than one year 516,815 - 516,815
Capital leases, due in more than one year 237,364 192,401 429,765
TOTAL LIABILITIES 8,175,703 6,627,698 14,803,401
Invested in capital assets, net of related debt 7,371,097 7,287,190 14,658,287
Restricted
Debt service 610,227 951,238 1,561,465
Capital improvements - 1,356,571 1,356,571
Unrestricted 2,332,425 3,598,941 5,931,366
TOTAL NET ASSETS 10,313,749$ 13,193,940$ 23,507,689$
LIABILITIES
Primary Government
ASSETS
NET ASSETS
CITY OF SANGER, TEXAS
GOVERNMENT–WIDE STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30, 2012
The Notes to Basic Financial Statements are
an integral part of this statement.
13
Fees, Fines and Capital Grants
Charges for and Governmental Business- type
Expenses Services Contributions Activities Activities Total
Governmental activities
General government 750,649$ 803,173$ -$ 52,524$ -$ 52,524$
Police and animal control 1,503,327 - - (1,503,327) - (1,503,327)
Streets and sanitation 1,445,542 - 500,000 (945,542) - (945,542)
Fire and EMS 766,011 516,203 - (249,808) - (249,808)
Court 209,333 191,903 - (17,430) - (17,430)
Culture and recreation 493,541 - - (493,541) - (493,541)
Interest on long term debt 340,136 - - (340,136) - (340,136)
Total governmental activities 5,508,539 1,511,279 500,000 (3,497,260) - (3,497,260)
Business-type activities
Water 1,064,019 1,502,507 - - 438,488 438,488
Sewer 824,434 1,343,929 - - 519,495 519,495
Electric 6,307,713 7,834,931 - - 1,527,218 1,527,218
Interest on long-term debt 217,588 - - - (217,588) (217,588)
Other 653,842 58,787 - - (595,055) (595,055)
Total business-type activities 9,067,596 10,740,154 - - 1,672,558 1,672,558
Total primary government 14,576,135$ 12,251,433$ 500,000$ (3,497,260)$ 1,672,558$ (1,824,702)$
General revenues
Taxes
Ad valorem 2,339,482$ -$ 2,339,482$
Sales 1,229,855 - 1,229,855
Franchise taxes 539,485 - 539,485
Licenses and permits 130,869 - 130,869
Interest income 16,826 32,902 49,728
Miscellaneous revenues 211,956 - 211,956
Total general revenues 4,468,473 32,902 4,501,375
Change in net assets 971,213 1,705,460 2,676,673
NET ASSETS, beginning of year 9,342,536 11,488,480 20,831,016
NET ASSETS, end of year 10,313,749$ 13,193,940$ 23,507,689$
Changes in Net Assets
Net (Expenses) Revenue and
Program Activities
Program Revenues
CITY OF SANGER, TEXAS
BALANCE SHEET – GOVERNMENTAL FUNDS
SEPTEMBER 30, 2012
The Notes to Basic Financial Statements are
an integral part of this statement.
14
Debt Capital
General Service Projects
Cash and equivalents 277,434$ 4,466$ -$
Certificates of deposit 408,004 - -
Accounts receivable, net
Property taxes, net of allowance of $60,667 56,635 24,272 -
Sales taxes 91,800 - -
Emergency medical services, net of
allowance of $1,582,222 107,490 - -
Other 26,356 - 11,594
Due from other funds - - 263,811
Restricted cash 94,796 346,997 45,677
Restricted certificates of deposit 111,565 - -
Total assets 1,174,080$ 375,735$ 321,082$
Liabilities
Accounts payable 157,511$ -$ 96,985$
Deferred revenue 165,451 24,840 -
Other liabilities 77,721 - -
Total liabilities 400,683 24,840 96,985
Fund balances
Restricted
Debt service - 350,895 -
Capital projects - - 224,097
Economic development - - -
Unassigned 773,397 - -
Total fund balances 773,397 350,895 224,097
TOTAL LIABILITIES
AND FUND BALANCES 1,174,080$ 375,735$ 321,082$
LIABILITIES AND FUND BALANCES
ASSETS
15
Total
Governmental
4A Fund 4B Fund Funds
113,031$ 20,195$ 415,126$
- - 408,004
- - 80,907
45,900 45,900 183,600
- - 107,490
277 1,398 39,625
- - 263,811
606,454 165,773 1,259,697
93,343 271,344 476,252
859,005$ 504,610$ 3,234,512$
-$ 18,250$ 272,746$
- - 190,291
- - 77,721
- 18,250 540,758
- - 350,895
- - 224,097
859,005 486,360 1,345,365
- - 773,397
859,005 486,360 2,693,754
.
859,005$ 504,610$ 3,234,512$
CITY OF SANGER, TEXAS
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET ASSETS
SEPTEMBER 30, 2012
The Notes to Basic Financial Statements are
an integral part of this statement.
16
Total fund balances - governmental funds 2,693,754$
281,317
Net assets of governmental activities 10,313,749$
190,291
(7,738,971)
Revenues earned but not available within sixty days of the year end are not
recognized as revenue in the fund financial statements.
Escalating payments for rent income are recorded when received as current
financial resources in the fund financial statements whereas they are are
deferred and recorded ratably over the life of lease in the government-wide
financial statements.
Long-term liabilities, including bonds payable, are not due and payable in the
current period and therefore are not reported in the fund financial statements.
(40,008)
Amounts reported for governmental activities in the statement of net assets are
different because:
Capital assets used in governmental activities are not current financial
resources and therefore are not reported in the governmental funds balance
sheet.
Costs associated with the issuance of governmental long-term debt are
expensed when incurred in the fund statements and capitalized and amortized
over the life of the debt in the government-wide financial statements.
Interest payable on long-term debt does not require current financial resources,
therefore interest payable is not reported as a liability in the governmental
funds balance sheet.
14,973,623
(46,257)
CITY OF SANGER, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30, 2012
The Notes to Basic Financial Statements are
an integral part of this statement.
17
Debt Capital
General Service Projects
REVENUES
Property taxes 1,637,637$ 701,845$ -$
Sales taxes 616,427
Licenses and permits 130,869 - -
Charges for services 803,173 - -
Fire and rescue 479,381 - -
Court 191,903 - -
Franchise taxes 539,485 - -
Intergovernmental revenues - - 500,000
Interest 5,326 2,986 3,400
Miscellaneous 87,875 - 36,000
Total revenues 4,492,076 704,831 539,400
EXPENDITURES
Current
General government 628,847 22 -
Police and animal control 1,408,666 - -
Streets and sanitation 838,133 - -
Fire and EMS 633,763 - -
Court 208,947 - -
Culture and recreation 419,795 - -
Capital outlay 481,377 - 1,265,281
Debt service
Principal retirement 79,211 496,800 -
Interest charges 1,282 273,649 -
Fiscal agent's fees and
debt issue costs - 48,811 -
Total expenditures 4,700,021 819,282 1,265,281
Excess (deficiency) of
revenues over expenditures (207,945) (114,451) (725,881)
Other financing sources (uses)
Proceeds on sale of assets 10,000 - -
Proceeds from capital lease 340,119 - -
Proceeds from bond refunding - 1,537,800 -
Premium on bond refunding - 41,221 -
Payment on bond refunding - (1,530,210) -
Transfers in 31,000 180,000 200,000
Transfers out (200,000) - -
Total other financing sources (uses)181,119 228,811 200,000
Net change in fund balances (26,826) 114,360 (525,881)
FUND BALANCES, beginning of year 800,223 236,535 749,978
FUND BALANCES, end of year 773,397$ 350,895$ 224,097$
18
Total
Governmental
4A Fund 4B Fund Funds
-$ -$ 2,339,482$
306,714 306,714 1,229,855
- - 130,869
- - 803,173
- - 479,381
- - 191,903
- - 539,485
- - 500,000
1,633 3,481 16,826
52,778 5,311 181,964
361,125 315,506 6,412,938
- 18,563 647,432
- - 1,408,666
- - 838,133
- - 633,763
- - 208,947
- - 419,795
- - 1,746,658
33,664 - 609,675
27,603 - 302,534
- - 48,811
61,267 18,563 6,864,414
299,858 296,943 (451,476)
- - 10,000
- - 340,119
- - 1,537,800
- - 41,221
- - (1,530,210)
- - 411,000
(15,500) (195,500) (411,000)
(15,500) (195,500) 398,930
284,358 101,443 (52,546)
574,647 384,917 2,746,300
859,005$ 486,360$ 2,693,754$
CITY OF SANGER, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30, 2012
The Notes to Basic Financial Statements are
an integral part of this statement.
19
Net change in fund balances - total governmental funds (52,546)$
1,746,658
(964,491)
(24,719)
221,781
(7,590)
(14,694)
29,992
36,822
Change in net assets of governmental activities 971,213$
Amounts reported for governmental activities in the statement of activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount of capital
assets recorded in the current period.
Certain revenues in the government-wide statement of activities that do not
provide current financial resources are not reported as revenue in the
governmental funds.
Depreciation expense on capital assets is reported in the statement of activities
and does not require the use of current financial resources. Therefore,
depreciation expense is not reported as expenditures in the governmental funds.
Governmental funds recognize all amounts received on the sale of fixed assets
as a gain. However, in the statement of activities, the gain or loss is offset by
the remaining net book value of the asset.
The issuance of long-term debt (e.g. bonds) provides current financial resources
to governmental funds, while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither
transaction, however, has any effect on net assets. Also, governmental funds
report the effect of issuance costs, premiums, discounts, and similar items when
debt is first issued, whereas the amounts are deferred and amortized in the
statement of activities. This amount consists of repayments of $609,675 and
issuance costs of $48,811 less proceeds of $340,119, premiums of $41,221,
amortization of debt issuance costs of $22,908 and a change in long-term
compensated absences payable of $32,457, which is the net effect of these
differences in the treatment of long-term debt and related items.
The refunding of long-term debt (e.g. bonds) provides current financial
resources and consumes current financial resources of governmental funds.
Neither transaction, however, has any effect on net assets.
Current year changes in accrued interest payable do not require the use of
current financial resources; therefore, are not reported as expenditures in
governmental funds.
Governmental funds recognize escalating rental income as received. However,
in the statement of activities, the rent is deferred and recognized ratably over the
term of the lease agreement.
CITY OF SANGER, TEXAS
STATEMENT OF NET ASSETS – PROPRIETARY FUNDS
SEPTEMBER 30, 2012
The Notes to Basic Financial Statements are
an integral part of this statement.
20
Water, Sewer,
and Electric
Fund
CURRENT ASSETS
Cash and investments 2,293,053$
Certificates of deposit 335,825
Receivables
Utility accounts receivable, net of allowance of $111,174 1,504,299
Other 33,074
Inventories 433,508
Total current assets 4,599,759
NONCURRENT ASSETS
Capital assets, at cost
Land and land improvements 323,164
Buildings and equipment 2,459,441
Infrastructure 22,112,636
Construction in progress 291,414
Accumulated depreciation (12,397,622)
Total capital assets, net of accumulated depreciation 12,789,033
Bond issue costs, net 73,087
Restricted cash and cash equivalents 1,040,028
Restricted certificates of deposit 1,583,542
Total noncurrent assets 15,485,690
TOTAL ASSETS 20,085,449$
CURRENT LIABILITIES
Accounts payable and accrued liabilities 581,313$
Accrued interest payable 53,033
Compensated absences, due within one year 34,108
Bonds payable, due within one year 479,993
Capital lease obligation, due within one year 178,000
Due to other funds 263,811
Other 93,975
Total current liabilities 1,684,233
NONCURRENT LIABILITIES
Compensated absences, due in more than one year 33,865
Bonds payable, due in more than one year 4,665,249
Capital lease obligation, due in more than one year 192,401
Customer deposits 315,761
Total liabilities 6,891,509
NET ASSETS
Invested in capital assets, net of related debt 7,287,190
Restricted
Revenue bond retirement 951,238
Capital improvements 1,356,571
Unrestricted 3,598,941
TOTAL NET ASSETS 13,193,940$
LIABILITIES AND NET ASSETS
ASSETS
CITY OF SANGER, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND
NET ASSETS – PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2012
The Notes to Basic Financial Statements are
an integral part of this statement.
21
Water, Sewer,
and Electric
Fund
OPERATING REVENUES
Charges for services 10,228,112$
Connection fees 58,410
Tap fees 396,350
Miscellaneous 57,282
Total operating revenue 10,740,154
OPERATING EXPENSES
Salaries, wages and benefits 1,334,282
Purchased professional and technical services 148,115
Utilities 343,184
Materials and supplies 126,149
Water and electric purchases 5,045,931
Franchise fees 355,622
Depreciation 885,039
Repairs and maintenance 535,312
Bad debt expense 76,374
Total operating expenses 8,850,008
Operating income 1,890,146
NONOPERATING REVENUES (EXPENSES)
Interest and investment income 32,902
Interest and amortization expense (217,588)
Total nonoperating expenses (184,686)
Change in net assets 1,705,460
NET ASSETS, beginning of year 11,488,480
NET ASSETS, end of year 13,193,940$
CITY OF SANGER, TEXAS
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2012
The Notes to Basic Financial Statements are
an integral part of this statement.
22
Water, Sewer,
and Electric
Fund
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers 10,399,883$
Cash paid to employees (1,354,368)
Cash paid to suppliers (6,693,881)
Net cash provided by operating activities 2,351,634
CASH FLOWS FROM CAPITAL
AND RELATED FINANCING ACTIVITIES
Principal paid on long-term debt (494,293)
Capital expenditures (217,445)
Interest and fees paid on debt issuance (206,464)
Net cash used in capital
and related financing activities (918,202)
CASH FLOWS FROM INVESTING ACTIVITIES
Reinvested interest (10,490)
Proceeds on maturity of investments 200,000
Interest on investments 32,902
Net cash provided by investing activities 222,412
Net change in cash 1,655,844
CASH AND CASH EQUIVALENTS, beginning of the year 1,677,237
CASH AND CASH EQUIVALENTS, end of the year 3,333,081$
CITY OF SANGER, TEXAS
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2012
(CONTINUED)
The Notes to Basic Financial Statements are
an integral part of this statement.
23
Water, Sewer,
and Electric
Fund
RECONCILIATION OF CASH AND CASH EQUIVALENTS
PER STATEMENT OF CASH FLOWS TO THE
STATEMENT OF NET ASSETS
Cash and investments 2,293,053$
Restricted cash and cash equivalents 1,040,028
Cash and cash equivalents - ending 3,333,081$
RECONCILIATION OF OPERATING INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income 1,890,146$
Adjustments to reconcile operating income to net cash provided by
operating activities
Depreciation 885,039
Increase in accounts receivable (358,423)
Increase in inventory (132,901)
Decrease in accounts payable
and accrued liabilities 55,357
Increase in other liabilities (5,736)
Increase in customer deposits 18,152
Net cash provided by operating activities 2,351,634$
NON-CASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
Related to issuance of refunding bonds:
Decrease in bond issue costs, net (22,061)$
Increase in bonds payable (57,200)
Increase in deferred loss on refunding bonds 79,261
Related to capital asset additions:
Capital assets additions financed through inter-fund balances 291,414$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
24
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Sanger (the City) was incorporated in 1886. The City operates under a Council-
Manager form of government and provides the following services as authorized by its
charter: general government, police and fire protection, emergency ambulance services,
highways and streets, water and wastewater operations, electricity operations, and public
improvements.
The accounting and reporting policies of the City relating to the funds included in the
accompanying basic financial statements conform to accounting principles generally
accepted in the United States of America applicable to state and local governments.
Generally accepted accounting principles for local governments include those principles
prescribed by the Governmental Accounting Standards Board (GASB), the American
Institute of Certified Public Accountants in the publication entitled Audits of State and Local
Governmental Units and by the Financial Accounting Standards Board (when applicable).
As allowed in Section P80 of GASB’s Codification of Governmental Accounting and
Financial Reporting Standards, the City has elected not to apply Financial Accounting
Standards Board Statements and Interpretations, Accounting Principles Board Opinions,
and Accounting Research Bulletins of the Committee of Accounting Procedure issued after
November 30, 1989. The more significant accounting policies of the City are described
below.
Financial Reporting Entity
As required by accounting principles generally accepted in the United States of America,
these financial statements include the primary government and organizations for which
the primary government is financially accountable and other organizations for which the
nature and significance of their relationship with the primary government are such that
exclusion would cause the reporting entity's financial statements to be misleading or
incomplete.
The definition of the reporting entity is based primarily on the notion of financial
accountability. A primary government is financially accountable for the organizations
that make up its legal entity. It is also financially accountable for legally separate
organizations if its officials appoint a voting majority of an organization's governing body
and either it is able to impose its will on that organization or there is a potential for the
organization to provide specific financial benefits to, or to impose specific financial
burdens on, the primary government. A primary government may also be financially
accountable for governmental organizations that are fiscally dependent on it.
A primary government has the ability to impose its will on an organization if it can
significantly influence the programs, projects, or activities of, or the level of services
performed or provided by, the organization. A financial benefit or burden relationship
exists if the primary government (a) is entitled to the organization's resources; (b) is
legally obligated or has otherwise assumed the obligation to finance the deficits of, or
provide financial support to, the organization; or (c) is obligated in some manner for the
debt of the organization. Some organizations are included as component units because
of their fiscal dependency on the primary government.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
25
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Financial Reporting Entity – Continued
An organization is fiscally dependent on the primary government if it is unable to adopt
its budget, levy taxes, set rates or charges, or issue bonded debt without approval by the
primary government.
The following entities were found to be component units of the City and are included in
the accompanying financial statements:
Blended Component Unit (4A) - The Sanger Texas Industrial Development
Corporation (STIDC) is governed by a board of five directors, all of whom are
appointed by the City Council of the City of Sanger and any of whom can be
removed from office by the City Council at its will. The STIDC was incorporated in
the state of Texas a non-profit industrial development corporation under Section 4A
of the Development Corporation Act of 1979. The purpose of the STIDC is to
promote economic development within the City of Sanger.
Blended Component Unit (4B) - The Sanger Texas Development Corporation
(STDC) is governed by a board of seven directors, all of whom are appointed by the
City Council at its will. The STDC was incorporated in the state of Texas as a non-
profit industrial development corporation under Section 4B of the Development
Corporation Act of 1979. The purpose of the STDC is to promote economic and
community development within the City of Sanger.
Basis of Presentation
The government-wide financial statements (the statement of net assets and the
statement of activities) report information on all of the activities of the City. The effect of
interfund activity within the governmental and business-type activities columns has been
removed from these statements. Governmental activities, which normally are supported
by taxes and intergovernmental revenues, are reported separately from business-type
activities, which rely to a significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a
given program are offset by program revenues. Direct expenses are those that are
clearly identifiable with a specific program. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given program and 2) operating or capital grants and
contributions that are restricted to meeting the operational or capital requirements of a
particular program. Taxes and other items not properly included among program
revenues are reported instead as general revenues.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
26
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Fund Financial Statements
The City segregates transactions related to certain functions or activities in separate
funds in order to aid financial management and to demonstrate legal compliance.
Separate statements are presented for governmental and proprietary activities. These
statements present each major fund as a separate column on the fund financial
statements; all non-major funds are aggregated and presented in a single column.
Governmental funds are those funds through which most governmental functions
typically are financed. The measurement focus of governmental funds is on the sources,
uses and balance of current financial resources. The City has presented the following
major governmental funds:
General Fund
The General Fund is the main operating fund of the City. This fund is used to
account for all financial resources not accounted for in other funds. All general tax
revenues and other receipts that are not restricted by law or contractual agreement
to some other fund are accounted for in this fund. General operating expenditures,
fixed charges and capital improvement costs that are not paid through other funds
are paid from the General Fund.
Debt Service Fund
The Debt Service Fund is used to account for the accumulation of financial
resources for the payment of principal, interest and related costs on general
long-term debt paid primarily from taxes levied by the City. The fund balance of the
Debt Service Fund is restricted to signify the amounts that are restricted exclusively
for debt service expenditures.
Capital Projects Fund
The Capital Projects Fund is used to account for funds received and expended for
the construction and renovation of thoroughfares, arterial streets and drainage
improvements in the City and construction, renovation, expansion and major
improvement of various City facilities, acquisition of land and other large
nonrecurring projects.
4A and 4B Funds
The 4A and 4B Funds are used to account for sales tax revenues collected for the
purposes set forth by the Sanger Economic Development Corporation.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
27
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Fund Financial Statements – Continued
Proprietary Funds are accounted for using the economic resources measurement focus
and the accrual basis of accounting. The accounting objectives are determinations of net
income, financial position and cash flow. All assets and liabilities are included on the
Statement of Net Assets. The City has presented the following major proprietary fund:
Water, Sewer and Electric Fund
The Water, Sewer and Electric Fund is the primary operating fund for water, sewer
distribution and electric. It also accounts for all financial resources of the City
concerning water, sewer and electric sales. Its activity is financed with debt secured
by a pledge of the net revenues and has the requirement that the cost of providing
services, including capital costs, be recovered by user fees and charges.
Proprietary funds distinguish operating revenues and expenses from non-operating
items. Operating revenues and expenses generally result from providing services and
producing and delivering goods in connection with a proprietary fund’s principal ongoing
operations. Operating expenses for the proprietary funds include the cost of personnel
and contractual services, supplies and depreciation on capital assets. All revenues and
expenses not meeting this definition are reported as non-operating revenues and
expenses.
Measurement Focus and Basis of Accounting
Measurement focus refers to what is being measured; basis of accounting refers to
when revenues and expenditures are recognized in the accounts and reported in the
financial statements. Basis of accounting relates to the timing of the measurement
made, regardless of the measurement focus applied.
The government-wide statements and fund financial statements for proprietary funds are
reported using the economic resources measurement focus and the accrual basis of
accounting. The economic resources measurement focus means all assets and liabilities
(whether current or non-current) are included on the statement of net assets and the
operating statements present increases (revenues) and decreases (expenses) in net
total assets. Under the accrual basis of accounting, revenues are recognized when
earned, including unbilled water and wastewater services which are accrued. Expenses
are recognized at the time the liability is incurred.
Governmental fund financial statements are reported using the current financial
resources measurement focus and are accounted for using the modified accrual basis of
accounting. Under the modified accrual basis of accounting, revenues are recognized
when susceptible to accrual; i.e., when they become both measurable and available.
Measurable means the amount of the transaction can be determined and available
means collectible within the current period or soon enough thereafter to be used to pay
liabilities of the current period. The City considers receivables collected within sixty days
after year-end to be available and recognizes them as revenues of the current year.
Expenditures are recorded when the related fund liability is incurred.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
28
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Measurement Focus and Basis of Accounting – Continued
However, debt service expenditures are recorded only when payment is due.
The revenues susceptible to accrual are property taxes, franchise fees, licenses,
charges for service, interest income and intergovernmental revenues. Sales taxes
collected and held by the state at year end on behalf of the government are also
recognized as revenue. All other governmental fund revenues are recognized when
received.
Cash and Investments
Cash of all funds, including restricted cash, are pooled into common pooled accounts in
order to maximize investment opportunities. Each fund whose monies are deposited in
the pooled cash accounts has equity therein, and interest earned on the investment of
these monies is allocated based upon relative equity at month end. An individual fund’s
pooled cash and investments are available upon demand. The City considers pooled
and other cash and investments amounts that are purchased with a maturity of ninety
days or less to be cash equivalents.
All investments are recorded at fair value based on quoted market prices. Fair value is
the amount at which a financial instrument could be exchanged in a current transaction
between willing parties.
State statutes authorize the City to invest in obligations of the U.S. Government or its
agencies; obligations of the State of Texas or its agencies; and certain other obligations,
repurchase agreements, money market mutual funds and certificates of deposits within
established criterion.
Restricted Resources
If both restricted and unrestricted resources are available for use, it is the City’s policy to
use restricted resources first and unrestricted resources as needed.
Property Taxes
Property taxes are levied by October 1 on the assessed value listed as of the prior
January 1 for all real and business personal property in conformity with Subtitle E, Texas
Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid
before February 1 of the year following the year in which imposed. On January 1 of each
year, a tax lien attaches to property to secure the payment of all taxes, penalties, and
interest ultimately imposed. Property tax revenues are considered available when they
become due or past due and receivable within the current period. Personal property
taxes not collected by April 1 are forwarded for collection proceedings. Real property
taxes not collected by July 1 are forwarded for collection proceedings.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
29
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Inventories and Prepaid Items
Inventories, which are recognized as expenses as consumed, are stated at cost (first-in,
first-out method). Inventories consist primarily of expendable supplies for the Proprietary
Fund. Prepaid balances are for payments made by the City in the current year to provide
services occurring in the subsequent fiscal year.
Interfund Receivables and Payables
Any residual balances outstanding between the governmental activities and business-
type activities are reported in the government-wide financial statements as internal
balances.
Transactions between Funds
Interfund services provided and used are accounted for as revenues and expenditures
or expenses. Transactions that constitute reimbursements to a fund for expenditures or
expenses initially made from it that are properly applicable to another fund, are recorded
as expenditures or expenses in the reimbursing fund and as a reduction of expenditures
or expenses in the fund reimbursed. All other interfund transactions are recorded as
transfers.
Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets, are
reported in the applicable governmental or business-type activities columns in the
government-wide financial statements and in the fund financial statements for
proprietary funds. All capital assets are valued at historical cost or estimated historical
cost if actual historical cost is not available. Donated assets are valued at their fair
market value on the date donated. Repairs and maintenance are recorded as expenses.
Renewals and betterments are capitalized.
Assets capitalized, not including infrastructure assets, have an original cost of $5,000 or
more and over one year of useful life. Depreciation has been calculated on each class of
depreciable property using the straight-line method. Estimated useful lives are as
follows:
Buildings and improvements 5-50 years
Machinery and equipment 3-20 years
Infrastructure 10-30 years
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
30
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Accumulated Vacation, Compensatory Time and Sick Leave
The amounts owed to employees for unpaid vacation and sick leave liabilities, including
the City’s share of employment-related taxes, are reported on the accrual basis of
accounting in the applicable governmental or business-type activity columns of the
government-wide statements and in the enterprise activities of the fund financial
statements. The liabilities and expenditures are reported on the modified accrual basis in
the governmental fund financial statements.
Nature and Purpose of Reservations and Designations of Fund Equity
The City implemented Governmental Accounting Standards Board Statement 54, Fund
Balance Reporting and Governmental Fund Type Definitions (GASB 54) during the year
ended September 30, 2011. This statement establishes fund balance classifications that
comprise a hierarchy based primarily on the extent to which a government is bound to
observe constraints imposed upon the use of the resources reported in governmental
funds. The objective of this statement is to enhance the usefulness of fund balance
information by providing clearer fund balance classifications that can be more
consistently applied and by clarifying the existing governmental fund type definitions.
Fund balance categories under GASB 54 are Nonspendable and Spendable.
Classifications under the Spendable category are Restricted, Committed, Assigned, and
Unassigned. These classifications reflect not only the nature of funds, but also provide
clarity to the level of restriction placed upon fund balance. Unassigned fund balance is a
residual classification within the General Fund. The General Fund should be the only
fund that reports a positive unassigned balance. In all other funds, unassigned is limited
to negative residual fund balance.
In accordance with GASB 54, the City classifies governmental fund balances in its
financial statements as follows:
1. Nonspendable Fund Balance – Includes fund balance amounts that cannot be
spent either because they are not in spendable form or because of legal or
contractual requirements. Examples include inventories, long-term receivables,
endowment principal, and/or prepaid/deferred items.
2. Spendable Fund Balance
a. Restricted Fund Balance – Includes amounts that can be spent only for
the specific purposes as imposed by law, or imposed by creditors,
grantors, contributors, or other governments’ laws and regulations.
Examples include federal and state grant programs, retirement of long-
term debt, and construction.
i. The aggregate fund balance of the debt service fund is legally
restricted for payment of bonded indebtedness and is not available for
other purposes until all bonded indebtedness is liquidated.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
31
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Nature and Purpose of Reservations and Designations of Fund Equity – Continued
ii. The fund balance of the capital projects fund reflects an amount
restricted for construction and major renovation projects, and it usually
represents unexpended proceeds from the sale of bonds, which
primarily have restricted use.
iii. The proceeds of specific revenue sources which are restricted to
expenditures for specified purposes as designated by grantors,
contributors, by vote of citizens, or governmental entities over state or
local program grants.
b. Committed Fund Balance – Includes amounts that can be used only for
the specific purposes as determined by the governing body by formal
action recorded in the minutes of the governing body. Commitments may
be changed or lifted only by the governing body taking the same formal
action that imposed the constraint originally. Examples include, but are
not specifically limited to, council action regarding construction, claims,
and judgments, retirement of loans/notes payable, and capital
expenditures. The City Council must take action to commit funds for a
specific purpose prior to the end of the fiscal year, but the amount of the
commitment may be determined after the end of the fiscal year.
c. Assigned Fund Balance – Includes amounts intended to be used by the
City for specific purposes. Pursuant to GASB 54, this intent can be
expressed by an official or body to which the governing body delegates
that authority. The City has delegated to the City Manager the ability to
determine and define the amounts of those components of fund balance
that are classified as Assigned. Examples take on the similar appearance
as those enumerated for committed fund balance, including the
appropriation of existing fund balance to eliminate a deficit in next year’s
budget.
d. Unassigned Fund Balance – Includes the residual classification of the
General Fund and includes all amounts not contained in other
classifications. By accounting for amounts in other funds, the City has
implicitly assigned the funds for the purposes of those particular funds.
In circumstances where an expenditure is to be made for a purpose for which amounts
are available in multiple fund balance classifications, the order in which resources will be
expended is as follows: restricted fund balance, followed by committed fund balance,
assigned fund balance, and lastly unassigned fund balance.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
32
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Net Assets
Net assets represent the difference between assets and liabilities. Net assets invested in
capital assets, net of related debt consists of capital assets, net of accumulated
depreciation, reduced by the outstanding balances of any borrowing used for the
acquisition, construction or improvements of those assets, and adding back unspent
proceeds. Net assets are reported as restricted when there are limitations imposed on
their use either through the enabling legislations adopted by the City or through external
restrictions imposed by creditors, grantors or laws or regulations of other governments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
financial statements and the reported amounts of revenues and expenditures during the
reporting period. Actual results could differ from those estimates.
NOTE 2. CASH AND INVESTMENTS
Cash and investments as of September 30, 2012 consist of the following:
Deposits with financial institutions 5,007,904$
Certificates of deposit 2,803,623
7,811,527$
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the
fair value of an investment. Generally, the longer the maturity of an investment the
greater the sensitivity of its fair value to changes in market interest rates. One of the
ways that the City manages its exposure to interest rate risk is by investing mainly in
certificates of deposit which purchase a combination of shorter term investments with an
average maturity of less than 30 days thus reducing the interest rate risk. The City
monitors the interest rate risk inherent in its portfolio by measuring the weighted average
maturity of its portfolio. The City has no specific limitations with respect to this metric.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
33
NOTE 2. CASH AND INVESTMENTS – CONTINUED
As of September 30, 2012, the City had the following investments:
Amount
Certificates of deposit 2,803,623$ 134 days
Investment Type
Weighted Average
Maturity
As of September 30, 2012 the City did not invest in any securities which are highly
sensitive to interest rate fluctuations.
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation
to the holder of the investment. This is measured by the assignment of a rating by a
nationally recognized statistical rating organization. Presented below is the minimum
rating required by (where applicable) the Public Funds Investment Act, the City’s
investment policy, or debt agreements, and the actual rating as of year-end for each
investment type.
Amount
Certificates of deposit 2,803,623$ N/A N/A
Investment Type
Minimum Legal
Rating
Rating as of
September 30, 2012
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be
invested in any one issuer. As of September 30, 2012, other than certificates of deposit,
the City did not have 5% or more of its investments with one issuer.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository
financial institution, a government will not be able to recover its deposits or will not be
able to recover collateral securities that are in the possession of an outside party. The
custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty to a transaction, a government will not be able to recover the value of its
investment or collateral securities that are in the possession of another party. The
Public Funds Investment Act and the City’s investment policy do not contain legal or
policy requirements that would limit the exposure to custodial credit risk for deposits or
investments, other than the following provision for deposits: The Public Funds
Investment Act requires that a financial institution secure deposits made by state or local
governmental units by pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit). The
market value of the pledged securities in the collateral pool must equal at least the bank
balance less the FDIC insurance at all times.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
34
NOTE 2. CASH AND INVESTMENTS – CONTINUED
Custodial Credit Risk – Continued
At September 30, 2012, the carrying amount of the City’s cash on hand and deposits
was $5,007,904 and the bank balance was $5,183,145. The full bank balance was
covered by depository insurance under the FDIC and pledged securities in the City’s
name.
NOTE 3. RESTRICTED ASSETS
Restricted assets are held for the following purposes in accordance with bond ordinances or
other legal restrictions for the Proprietary Fund as follows:
Debt service - interest and sinking fund 951,238$
Capital improvements 1,356,571
Refundable utility deposits 315,761
2,623,570$
Restricted assets are held for the following purposes in accordance with bond ordinances or
other legal restrictions for the Governmental Funds as follows:
Debt service 346,997$
Capital improvements 202,110
Economic and community development 1,186,842
1,735,949$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
35
NOTE 4. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2012, was as follows:
Balance Balance
October 1, Additions/ Retirements/ September 30,
2011 Completions Adjustments 2012
Governmental activities
Capital assets not being depreciated
Land 862,307$ -$ -$ 862,307$
Construction in progress 3,239,639 1,265,281 (4,232,535) 272,385
Total capital assets not
being depreciated 4,101,946 1,265,281 (4,232,535) 1,134,692
Capital assets being depreciated
Infrastructure 9,800,941 - 749,693 10,550,634
Buildings and improvements 3,567,983 70,000 3,482,842 7,120,825
Machinery and equipment 2,099,506 481,377 (87,344) 2,493,539
Total capital assets
being depreciated 15,468,430 551,377 4,145,191 20,164,998
Less accumulated depreciation
Infrastructure 3,305,559 580,486 - 3,886,045
Buildings and improvements 787,822 149,475 - 937,297
Machinery and equipment 1,330,820 234,530 (62,625) 1,502,725
Total accumulated depreciation 5,424,201 964,491 (62,625) 6,326,067
Total capital assets being
depreciated, net 10,044,229 (413,114) 4,207,816 13,838,931
Net governmental activities
capital assets 14,146,175$ 852,167$ (24,719)$ 14,973,623$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
36
NOTE 4. CAPITAL ASSETS – CONTINUED
Balance Balance
October 1, Additions/ Retirements/ September 30,
2011 Completions Adjustments 2012
Business-type activities
Capital assets not being depreciated
Land 323,164$ -$ -$ 323,164$
Construction in progress - 291,414 - 291,414
Total capital assets not
being depreciated 323,164 291,414 - 614,578
Capital assets being depreciated
Infrastructure 22,072,504 40,132 - 22,112,636
Buildings and improvements 860,132 - - 860,132
Machinery and equipment 1,421,996 177,313 - 1,599,309
Total capital assets
being depreciated 24,354,632 217,445 - 24,572,077
Less accumulated depreciation
Infrastructure 10,235,131 724,578 - 10,959,709
Buildings and improvements 164,565 52,239 - 216,804
Machinery and equipment 1,112,887 108,222 - 1,221,109
Total accumulated depreciation 11,512,583 885,039 - 12,397,622
Total capital assets being
depreciated, net 12,842,049 (667,594) - 12,174,455
Net business-type activities
capital assets 13,165,213$ (376,180)$ -$ 12,789,033$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
37
NOTE 4. CAPITAL ASSETS – CONTINUED
Depreciation expense was charged as direct expense to programs of the primary
government as follows:
Governmental activities
General government 70,760$
Public safety 94,661
Streets and sanitation 607,409
Fire and rescue 117,529
Court 386
Culture and recreation 73,746
Total governmental activities 964,491$
Business-type activities
Water 273,790$
Sewer 220,701
Electric 375,093
Other 15,455
Total business-type activities 885,039$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
38
NOTE 5. LONG-TERM DEBT
At September 30, 2012, the City's bonds and notes payable consisted of the following:
Governmental Business-type
$6,500,000 Series 2006, Combination Tax and
Revenue Ceritifcates of Obligation, dated August 7,
2006, due in annual installments through 2022,
bearing interest rates of 4% to 5%.2,001,000$ 2,349,000$
$1,750,000 Series 2007, Combination Tax and
Revenue Certificates of Obligation, dated June 15,
2007, due in annual installments through 2027,
bearing interest at 4.4%.493,000 957,000
$3,200,000 Series 2009, Combination Tax and
Revenue Certificates of Obligation, dated July 30,
2009, due in annual installments through 2026,
bearing interest rates of 3% to 4.75%.2,770,000 -
$3,495,000 Series 2012, General Obligation
Refunding, dated March 20, 2012, due in annual
installments through 2021, bearing interest rates of
2% to 3%.1,504,800 1,915,200
Note payable to a financial institution in monthly
installments of $5,106 including interest at 4.6%, due
June 5, 2024, secured by property financed.553,391 -
Deferred loss on refunding bonds.(33,743) (75,958)
7,288,448$ 5,145,242$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
39
NOTE 5. LONG-TERM DEBT – CONTINUED
The following is a summary of long-term debt transactions of the City for the year ended
September 30, 2012:
Balance Balance Due
Beginning End within
of Year Increases Decreases of Year One Year
Governmental activities
Compensated absences 77,947$ 108,885$ (76,428)$ 110,404$ 45,164$
Notes payable 596,104 - (42,713) 553,391 36,576
Certificates of obligation 7,222,800 1,537,800 (1,991,800) 6,768,800 541,200
Capital leases 70,162 340,119 (70,162) 340,119 102,755
Deferred loss on refunding bonds - (35,210) 1,467 (33,743) (3,912)
Total governmental activities 7,967,013 1,951,594 (2,179,636) 7,738,971 721,783
Business-type activities
Compensated absences 54,220 82,211 (68,458) 67,973 34,108
Revenue bonds 5,652,200 1,957,200 (2,388,200) 5,221,200 488,800
Capital leases 376,494 - (6,093) 370,401 178,000
Deferred loss on refunding bonds - (79,261) 3,303 (75,958) (8,807)
Total business-type activities 6,082,914 1,960,150 (2,459,448) 5,583,616 692,101
Total primary government 14,049,927$ 3,911,744$ (4,639,084)$ 13,322,587$ 1,413,884$
The City issues general obligation bonds, which are direct obligations of the City and pledge
the full faith and credit of the City.
For the governmental activities, compensated absences are generally liquidated with
resources of the General Fund.
General obligation bonds issued for governmental activity purposes are liquidated by the
debt service fund. Notes payable issued for governmental activity purposes are liquidated by
the General Fund. Revenue bonds and notes payable issued for business-type activities are
repaid from those activities.
During fiscal year 2012, the City issued $3,495,000 in General Obligation Refunding Bonds
with interest rates ranging from 2% - 3%, which was used to advance refund the outstanding
Series 1996 and Series 2002 Utility System Revenue Bonds and the Series 2002
Combination Tax and Revenue Certificates of Obligation for a total of $3,395,000. The
average interest rate on the bonds being refunded was 4.86%. The net proceeds of
$3,477,750 (after payment of issuance costs) were used to pay the outstanding balance on
the refunded bonds. As a result, the refunded bonds were considered defeased, and the
liability for those bonds has been removed from the government-wide statements. As of
September 30, 2012, $3,395,000 of bonds outstanding are considered defeased.
The City advance refunded the bonds to reduce its total debt service payments over the next
10 years by $492,023 and to obtain an economic gain of $395,704 (the difference between
the present value of the debt service payments on the old and new debt).
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
40
NOTE 5. LONG-TERM DEBT – CONTINUED
The annual requirements to amortize all debts outstanding as of September 30, 2012, are
as follows:
Revenue Bonds
Due Fiscal Year Ending September 30 Principal Interest Total
2013 488,800$ 360,480$ 849,280$
2014 503,000 352,391 855,391
2015 519,500 349,433 868,933
2016 536,400 340,551 876,951
2017 514,000 286,608 800,608
2018-2022 2,270,100 1,054,317 3,324,417
2023-2027 389,400 52,998 442,398
5,221,200$ 2,796,778$ 8,017,978$
Certificates of Obligation
Due Fiscal Year Ending September 30 Principal Interest Total
2013 541,200$ 258,253$ 799,453$
2014 557,000 240,761 797,761
2015 575,500 222,699 798,199
2016 593,600 204,054 797,654
2017 581,000 180,783 761,783
2018-2022 2,759,900 562,028 3,321,928
2023-2027 1,160,600 141,939 1,302,539
6,768,800$ 1,810,517$ 8,579,317$
Notes Payable
Due Fiscal Year Ending September 30 Principal Interest Total
2013 36,576$ 24,620$ 61,196$
2014 38,368 22,898 61,266
2015 40,171 21,094 61,265
2016 42,058 19,209 61,267
2017 44,034 17,233 61,267
2018-2022 253,217 53,118 306,335
2023-2027 98,967 3,939 102,906
553,391$ 162,111$ 715,502$
Business-Type Activities
Governmental Activities
Governmental Activities
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
41
NOTE 6. CAPITAL LEASE OBLIGATIONS
The City has entered into capital lease agreements. The leased property under capital
leases is classified as machinery and equipment with a total capitalized cost of
approximately $948,989 and an amortized value of approximately $750,515 at
September 30, 2012. Amortization expense has been included in depreciation expense for
the year ended September 30, 2012.
The following is a schedule of future minimum payments under the capital leases together
with the present value of the net minimum lease payments as of September 30, 2012:
2013 315,905$
2014 211,451
2015 211,478
2016 36,946
775,780
Less amount representing interest 65,260
Present value of net minimum lease payments 710,520$
NOTE 7. PENSION PLAN
Plan Description
The City of Sanger provides pension benefits for all of its full-time employees through a
non-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas
Municipal Retirement System (TMRS), an agent multiple-employer public employee
retirement system. The plan provisions that have been adopted by the City are within
the options available in the governing state statutes of TMRS.
TMRS issues a publicly available comprehensive annual financial report that includes
financial statements and required supplementary information (RSI) for TMRS; the report
also provides detailed explanations of the contributions, benefits and actuarial methods
and assumptions used by the System. The report may be obtained from TMRS’ website
at www.TMRS.com.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
42
NOTE 7. PENSION PLAN – CONTINUED
The plan provisions are adopted by the governing body of the City, within the options
available in the state statutes governing TMRS and within the actuarial constraints also
in the statutes. Plan provisions for the City are as follows:
Deposit rate 6%
Matching ratio (City to employee) 2-1
A member is vested after 5 years
Updated service credit 100% repeating, transfers
Annuity increase (to retirees) 0% of CPI repeating
Benefits
Benefits depend upon the sum of the employee’s contributions to the plan, and City-
financed monetary credits, both with interest. At the date the plan began, the City
granted monetary credits for service rendered before the plan began of a theoretical
amount equal to two times what would have been contributed by the employee with
interest, prior to establishment of the plan. Monetary credits for service since the plan
began are a percent (100%, 150%, 200%) of the employee’s accumulated contributions.
In addition, the City can grant as often as annually another type of monetary credit
referred to as an updated service credit which is a theoretical amount which, when
added to the employee’s accumulated contributions and the monetary credits for service
since the plan began, would be the total monetary credits and employee contributions
accumulated with interest if the current employee contribution rate and the City matching
percent had always been in existence and if the employee’s salary had always been the
average of his salary in the last three years that are one year before the effective date.
At retirement, the benefit is calculated as if the sum of the employee’s accumulated
contributions with interest and the employer-financed monetary credits with interest were
used to purchase an annuity.
Members can retire at certain ages, based on the years of service with the City. The
Service Retirement Eligibilities for the City are 5 years at 60 years of age or 20 years at
any age.
Contributions
Under the state law governing TMRS, the contribution rate for each city is determined
annually by the actuary, using the Projected Unit Credit actuarial cost method. This rate
consists of the normal cost contribution rate and the prior service cost contribution rate,
which is calculated to be a level percent of payroll from year to year. The normal cost
contribution rate finances the portion of an active member's projected benefit allocated
annually; the prior service contribution rate amortizes the unfunded (overfunded)
actuarial liability (asset) over the applicable period for the City. Both the normal cost and
prior service contribution rates include recognition of the projected impact of annually
repeating benefits, such as Updated Service Credits and Annuity Increases.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
43
NOTE 7. PENSION PLAN – CONTINUED
Contributions – Continued
The City contributes to the TMRS Plan at an actuarially determined rate. Both the
employees and the City make contributions monthly. Since the City needs to know its
contribution rate in advance for budgetary purposes, there is a one-year delay between
the actuarial valuation that serves as the basis for the rate and the calendar year when
the rate goes into effect (i.e., December 31, 2011 valuation is effective for rates
beginning January 2013). The annual pension cost is $191,163 for the year ended
September 30, 2012, and there is no net pension obligation as of September 30, 2012.
Trend information for the past three years for TMRS is as follows:
Annual Percentage Actual Amount Net
Pension Cost of APC of APC Pension
Year (APC) Contributed Contributed Obligation
2010 187,668$ 100% 187,668$ -$
2011 217,754 100% 217,754 -
2012 191,163 100% 191,163 -
The required contribution rates for fiscal year 2012 were determined as part of the
December 31, 2009 and 2010 actuarial valuations. Additional information as of the
latest actuarial valuation, December 31, 2011, also follows:
Valuation Date 12/31/09
12/31/10 12/31/11
Actuarial Cost Method Projected Unit Credit Projected Unit Credit Projected Unit Credit
Amortization Method Level Percent Level Percent Level Percent
of Payroll of Payroll of Payroll
GASB 25 Equivalent Single 23 years; 22.7 years; 21.8 years;
Amortization Period closed period closed period closed period
Amortization Period For New
Gains/Losses 25 years 25 years 25 years
Asset Valuation Method 10-Year Smoothed 10-Year Smoothed 10-Year Smoothed
Market Market Market
Actuarial Assumptions:
Investment Rate of Return* 7.5% 7.0% 7.0%
Projected Salary Increases* Varies by Varies by Varies by
age and service age and service age and service
* Includes inflation at 3.0% 3.0% 3.0%
cost of living adjustments 0.0% 0.0% 0.0%
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
44
NOTE 7. PENSION PLAN – CONTINUED
Contributions – Continued
The funded status as of December 31, 2011, the most recent actuarial valuation date, is
as follows:
Actuarial Actuarial Actuarial UAAL as a
Valuation Value of Accrued Funded Unfunded AAL Covered percentage of
Date Assets Liability (AAL) Ratio (UAAL) Payroll Covered Payroll
12/31/11 4,691,607$ 5,122,534$ 91.6% 430,927$ 2,662,684$ 16.2%
Actuarial valuations involve estimates of the value of reported amounts and assumptions
about the probability of events far into the future. Actuarially determined amounts are
subject to continual revision as actual results are compared to past expectations and
new estimates are made about the future.
Actuarial calculations are based on the benefits provided under the terms of the
substantive plan in effect at the time of each valuation, and reflect a long-term
perspective. Consistent with that perspective, actuarial methods and assumptions used
include techniques that are designed to reduce short-term volatility in actuarial accrued
liabilities and the actuarial value of assets. The schedule of funding progress, presented
as Required Supplementary Information following the notes to basic financial
statements, presents multi-year trend information about whether the actuarial value of
plan assets is increasing or decreasing over time relative to the actuarial accrued liability
of benefits.
NOTE 8. COMMITMENTS
The City entered into a three year contract in 2009 with the AEP Energy Partners, Inc. for
the delivery of electricity. During 2012, this contract was extended for an additional seven
years to expire in 2019. Payments under this contract are based on meter readings charged
per month.
The City had outstanding encumbrances totaling $108,398 as of September 30, 2012.
At September 30, 2012, the City was committed to several long-term construction contracts.
The Capital Projects Fund and the Enterprise Fund were contractually committed to $73,076
and $27,603, respectively, under these contracts.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
45
NOTE 9. RENTAL INCOME
On March 1, 2012, the City entered into a non-cancelable lease agreement with a
corporation of which a city council member is a principal member of management. The
leased property is owned by the 4A Fund and has a cost $1,083,797 with accumulated
depreciation of $99,706 as of September 30, 2012. The lease provides for a base rent and
an adjustment each year related to excess operating expenses (if any) incurred annually.
During the year ended September 30, 2012, the City received $32,778 in rental revenue.
Minimum future rentals on non-cancelable tenant operating leases at September 30, 2012
are as follows for fiscal years ending September 30:
2013 78,667$
2014 78,667
2015 45,889
Future minimum rentals 203,223$
NOTE 10. INTERFUND BALANCES AND TRANSFERS
The Enterprise Fund owes the Capital Projects Fund $263,811 at September 30, 2012. The
interfund balance is related to reimbursement for capital assets, and is to be repaid or
collected in the normal course of business, within one year of the fiscal year-end.
All interfund transfers between the various funds are approved supplements to the
operations of those funds.
Transfers In Transfers Out Amount
General fund 4A fund 15,500$
General fund 4B fund 15,500
Capital projects fund General fund 200,000
Debt service fund 4B fund 180,000
411,000$
Transfers are primarily used to move funds from:
The 4A and 4B funds to the general fund for payment of administrative costs.
The general fund to the capital projects fund to reimburse for project costs.
4B fund to the debt service fund to service the debt related to the 4B fund.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
46
NOTE 11. RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters.
The City insures its buildings and contents, law enforcement liability, public officials' liability,
general liability and auto liability under a renewable one year policy with the Texas Municipal
League. The City insures its workers compensation risk by participating in the Texas
Municipal League Intergovernmental Risk Pool which is a self-insurance policy mechanism
for political subdivisions in Texas. Rates are set by the State Insurance Board. Each
participant's contribution to the pool is adjusted based on its workers' compensation history.
The City is responsible only to the extent of premiums paid and contributions made to Texas
Municipal League and the Intergovernmental Risk Pool. There have been no significant
changes in insurance coverage as compared to last year and settlements have not
exceeded coverage in each of the past three fiscal years.
NOTE 12. CONDUIT DEBT
The City issued notes payable totaling $232,358,091 for the purpose of assisting with
financing needed by not-for-profit organizations to promote their cause. Final maturities on
notes payable range from March 2017 through December 2041. The notes are secured by
various assets of the borrower.
The total amount outstanding on all of the notes payable is $230,350,185 as of
September 30, 2012. The City has no liability for the notes payable in the event of default by
the borrowers. Accordingly, the bonds are not reported as liabilities in the City’s financial
statements.
NOTE 13. PLEDGED REVENUES
The City has pledged revenues derived from the operation of the utility system, net of
operating and maintenance expenses, to repay $6,617,200 in utility revenue bonds. The
total amount of outstanding principal as of September 30, 2012 was $5,221,200. Proceeds
from the bonds provided financing for improvements to the utility system, as well as
refunding $1,900,000 in bonds. The bonds are payable solely from the net earnings of the
utility system and are payable through 2027. The total principal and interest remaining to be
paid on the bonds is $8,017,978. Principal and interest paid for the current year and net
utility system revenues were $699,669 and $1,890,146, respectively.
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF SANGER, TEXAS
SCHEDULE OF FUNDING PROGRESS FOR
PARTICIPATION IN TEXAS MUNICIPAL RETIREMENT SYSTEM
YEAR ENDED SEPTEMBER 30, 2012
47
Unfunded
Actuarial
Unfunded Accrued Liability
Actuarial Actuarial Actuarial Actuarial Annual as a
Valuation Value of Accrued Percentage Accrued Covered Percentage of
Date Assets Liability Funded Liability Payroll Covered Payroll
12/31/09 3,419,092$ 3,973,365$ 86.1% 554,273$ 2,503,067$ 22.1%
12/31/10 4,202,344 4,663,669 90.1% 461,325 2,454,429 18.8%
12/31/11 4,691,607 5,122,534 91.6% 430,927 2,662,684 16.2%
CITY OF SANGER, TEXAS
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
YEAR ENDED SEPTEMBER 30, 2012
48
Variance with
Actual Final Budget
Original Final Amount Over / (Under)
Revenues
Property taxes 1,671,380$ 1,671,380$ 1,637,637$ (33,743)$
Sales taxes 483,420 483,420 616,427 133,007
Licenses and permits 53,990 53,990 130,869 76,879
Charges for services 690,575 690,575 803,173 112,598
Fire and rescue 457,000 457,000 479,381 22,381
Court 345,122 345,122 191,903 (153,219)
Franchise taxes 543,800 543,800 539,485 (4,315)
Interest 10,000 10,000 5,326 (4,674)
Miscellaneous revenues 145,600 145,600 87,875 (57,725)
Total revenues 4,400,887 4,400,887 4,492,076 91,189
Expenditures
Current
General government 684,998 684,998 628,847 (56,151)
Public safety 1,454,823 1,454,823 1,408,666 (46,157)
Streets and sanitation 918,523 918,523 838,133 (80,390)
Fire and rescue 675,709 675,709 633,763 (41,946)
Court 233,095 233,095 208,947 (24,148)
Culture and recreation 493,214 493,214 419,795 (73,419)
Principal 78,153 78,153 79,211 1,058
Interest and other - - 1,282 1,282
Capital outlay 329,015 329,015 481,377 152,362
Total expenditures 4,867,530 4,867,530 4,700,021 (167,509)
Excess (deficiency) of revenues
over expenditures (466,643) (466,643) (207,945) 258,698
Other financing sources (uses)
Proceeds on sale of assets 7,500 7,500 10,000 2,500
Proceeds from capital lease - - 340,119 340,119
Operating transfers in 109,154 109,154 31,000 (78,154)
Operating transfers out - - (200,000) (200,000)
Total other financing sources (uses)116,654 116,654 181,119 64,465
Excess (deficiency) of revenues and
other financing sources over expenditures
and other financing uses (349,989) (349,989) (26,826) 323,163
FUND BALANCE, beginning of year 800,223 800,223 800,223 -
FUND BALANCE, end of year 450,234$ 450,234$ 773,397$ 323,163$
Budgeted Amounts
SUPPLEMENTARY INFORMATION
CITY OF SANGER, TEXAS
COMBINING SCHEDULE OF REVENUES AND EXPENSES
PROPRIETARY FUND BY DEPARTMENT
YEAR ENDED SEPTEMBER 30, 2012
49
Water Sewer
OPERATING REVENUES
Charges for services 1,321,657$ 1,128,429$
Connection fees - -
Tap fees 180,850 215,500
Miscellaneous - -
Total operating revenue 1,502,507 1,343,929
OPERATING EXPENSES
Salaries and wages 217,647 123,675
Purchased professional and technical services 10,243 3,325
Utilities 154,409 162,689
Materials and supplies 20,960 25,433
Water and electric purchases 220,743 -
Franchise fees - -
Depreciation 289,245 220,701
Repairs and maintenance 141,508 279,965
Bad debt expense 9,264 8,646
Total operating expenses 1,064,019 824,434
Operating income (loss) 438,488 519,495
NONOPERATING REVENUES (EXPENSES)
Interest and investment income - -
Interest and amortization expense (73,259) (37,266)
Total nonoperating revenues (expenses)(73,259) (37,266)
CHANGE IN NET ASSETS 365,229$ 482,229$
50
Fleet Data
Electric Services Administration Processing Total
7,776,521$ -$ 1,505$ -$ 10,228,112$
58,410 - - - 58,410
- - - - 396,350
- - 57,282 - 57,282
7,834,931 - 58,787 - 10,740,154
507,409 45,938 228,984 210,629 1,334,282
46,198 689 44,766 42,894 148,115
11,569 4,141 5,279 5,097 343,184
49,454 2,303 14,253 13,746 126,149
4,825,188 - - - 5,045,931
355,622 - - - 355,622
375,093 - - - 885,039
78,716 5,325 19,280 10,518 535,312
58,464 - - - 76,374
6,307,713 58,396 312,562 282,884 8,850,008
1,527,218 (58,396) (253,775) (282,884) 1,890,146
- - 32,902 - 32,902
(105,974) - (1,089) - (217,588)
(105,974) - 31,813 - (184,686)
1,421,244$ (58,396)$ (221,962)$ (282,884)$ 1,705,460$
CITY OF SANGER, TEXAS
ANALYSIS OF PROPERTY TAXES RECEIVABLE
YEAR ENDED SEPTEMBER 30, 2012
WITH COMPARATIVE TOTALS FOR
FOUR YEARS PRIOR
51
2012 2011 2010 2009 2008
Adjusted tax roll 2,311,086$ 2,330,034$ 2,256,987$ 2,308,903$ 2,118,117$
Less collections 2,280,947 2,276,461 2,216,114 2,256,275 2,078,588
Current year property taxes receivable 30,139 53,573 40,873 52,628 39,529
Prior year property taxes receivable 111,435 86,871 79,796 74,407 71,283
Total property taxes receivable, gross (1) 141,574$ 140,444$ 120,669$ 127,035$ 110,812$
Total assessed property value 365,072,180$ 359,484,787$ 364,030,183$ 341,028,251$ 336,831,151$
Tax rate per $100 0.63305$ 0.63305$ 0.62000$ 0.62000$ 0.59960$
Percent of current taxes collected to billed 98.70% 97.70% 98.19% 97.72% 98.13%
(1) before deducting allowance for doubtful accounts
Fiscal Year
JURISDICTION Date May 6, 2013
SINGLE AUDIT ACT COMPLIANCE REPORT
Date your fiscal year ended: September 30, 2012
Please check the most appropriate statement below regarding your o1 gani40ti011'0 compliance with OMB Circular A-133 audit requirements.
Also, please complete all contact information requested. Return this form and related audit reports to the Texas Division of Emergency
Management (TDEM), either via mail or e-mail as described at the bottom of this form.
Please check one of the following boxes, indicating whether you are subject to the A133 Single Audit:
❑ Our required Circular A-133 Audit for fiscal year ended 2012 is attached. Included is the a) audited Annual Financial
Report, b) the Single Audit report including the Schedule of expenditures for Federal and State expended funds and
the c) Single Audit Act Compliance Report for 2012 (this form). Also, a copy of any management report issued in
conjunction with the 2012 audit.
❑ Our required Circular A-133 Audit for fiscal year ended 2012 is not attached, but will be completed by
(Date)_/_/_ and submitted to the Texas Division of Emergency Management by _/_/_. The audit report
will include the audited Annual Financial Report, the Single Audit report including the Schedule of Expenditures for
Federal and State expended funds, and any management report issued in conjunction with the 2012 audit.
❑ We are not subject to an OMB Circular A-133 Audit because we expended less than $500,000 in Federal Awards,
from all sources, and we expended less than $500,000 in State awards from all sources combined, in our Fiscal
Year 2012.
❑ We have elected aerogram -specific audit for our OMB Circular A-133 reporting. Our Annual Financial Report will be
completed and will be submitted to the Federal Clearinghouse as designated by OMB.
❑ We are a State Agency or University audited by the State Auditor's Office or other state recognized accounting
agency. We DID expend Federal or State awards that passed through DPS/TDEM/SAA in our FY-2012.
❑ We are a State Agency or University audited by the State Auditor's Office or other state recognized accounting
agency. We DID NOT expend Federal or State awards that passed through DPS/TDEM/SAA in our FY 2012.
❑ All of our grants from TDEM/SAA have been closed and we are no longer required to file a Single Audit with
TDEM/SAA.
DlreCt COntaCt —The person within your organization that we are to contact for A-133 questions, etc. (Please print)
Print Name/Title: Cheryl Davenport, Finance Director Phone Number: 940-458-7930
E-mail address: cdavenport@sangertexas.org
Mailing Address: PO Box 1729 City: Sanger Zip: 76266
Highest Elected Official, Executive, Director, etc, in your jurisdiction, non-profit, or agency (Please print)
Title: Mayor Name: Thomas Muir
Phone Number: 940458-7930 Mailing Address: PO Box 1729, Sanger, TX 76266
Email address: tmuirla'D.sangertexas.org
Please return this form to TDEM one of the following ways:
Via regular mail:
Texas Division of Emergency Management
Attn: Robert Newsom
Support Services Section
MSC 0226
P.O. Box 4087
Austin, TX. 78773-0226
Via E-mail: A133Review@dps.texas.gov
Note: If you send information via email., please
include your organization name in the subject line.
Questions? Call Robert Newsom @ (512) 437-4742